AMENDMENT NO. 1 TO LEASE


THIS AMENDMENT NO. 1 is made and entered into this 8th day of
April, 1999, by and between JOHN ARRILLAGA, Trustee, or his Successor
Trustee UTA dated 7/20/77 (JOHN ARRILLAGA SURVIVOR'S TRUST) (previously
known as the "John Arrillaga Separate Property Trust") as amended, and
RICHARD T. PEERY, Trustee, or his Successor Trustee UTA dated 7/20/77
(RICHARD T. PEERY SEPARATE PROPERTY TRUST) as amended, collectively as
LANDLORD, and TERAYON COMMUNICATION SYSTEMS, INC., a Delaware
corporation, as TENANT.

RECITALS

A. WHEREAS, by Lease Agreement dated January 23, 1996 Landlord
leased to Tenant approximately 29,313+/- square feet of that certain
37,145+/- square foot building (with Tenant occupying one hundred
percent (100%) of the building effective July 1, 1998) located at 2952
Bunker Hill Lane, Santa Clara, California, the details of which are more
particularly set forth in said January 23, 1996 Lease Agreement, and

B. WHEREAS, said Lease was amended by the Commencement Letter
dated March 28, 1996 which confirmed the April 1, 1996 Lease
Commencement Date and the March 31, 2002 Lease Termination Date, and,

C. WHEREAS, it is now the desire of the parties hereto to amend
the Lease by adding a "Coterminous" paragraph and a "Cross Default"
paragraph under said Lease Agreement as hereinafter set forth.

AGREEMENT

NOW THEREFORE, for valuable consideration, receipt of which is
hereby acknowledged, and in consideration of the hereinafter mutual
promises, the parties hereto do agree as follows:

1. LEASE TERMS CO-TERMINOUS: It is acknowledged that (i) concurrently
with the execution of this Amendment, Landlord and Tenant are also
executing Lease Agreement dated April 8, 1999 (hereinafter referred to
as the "New Lease") affecting adjacent property located at 5150 Great
America Parkway, Santa Clara, California and (ii) it is the intention of
the parties that the term of this Lease be coterminous with the term of
the New Lease such that the terms of both leases expire on the same
date; provided, however, the termination of this Lease resulting from
the terms and conditions stated under Paragraph 22 "Bankruptcy and
Default" (subject to Landlord's option as stated in the respective
leases' "Cross Default" Paragraph) or Paragraph 24 "Destruction" or
Paragraph 25 "Eminent Domain" shall not result in a termination of the
New Lease, unless Landlord elects, at its sole and absolute discretion,
to terminate both of the leases.

2. CROSS DEFAULT: As a material part of the consideration for the
execution of the New Lease by Landlord, it is agreed between Landlord
and Tenant that a default under this Lease, or a default under said
New Lease may, at the option of Landlord, be considered a default under
both leases, in which event Landlord shall be entitled (but in no event
required) to apply all rights and remedies of Landlord under the terms
of one lease to both leases including, but not limited to, the right to
terminate one or both of said leases by reason of a default under said
New Lease or hereunder.

EXCEPT AS MODIFIED HEREIN, all other terms, covenants, and
conditions of said January  23, 1996 Lease Agreement shall remain in full
force and effect.

IN WITNESS WHEREOF, Landlord and Tenant have executed this
Amendment No. I to Lease as of the day and year last written below.

LANDLORD:

JOHN ARRILLAGA SURVIVOR'S TRUST
BY:___________________________
        John Arrillaga, Trustee
Date:  June 14, 1999



RICHARD T. PEERY SEPARATE PROPERTY TRUST
BY: _______________________________
        Richard T. Peey, Trustee
Date:  June 15, 1999
TENANT:

TERAYON COMMUNICATION SYSTEMS, INC. a Delaware corporation
BY: _________________________________
        Zaki Rakib, CEO
Date:  May 21, 1999
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